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"UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

"UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

Old May 25th 2008, 12:25 pm
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Default "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

This is (c) Dow Jones, reported by Reuters

15:23 25May08 DJN-DJ FOCUS:

UK Property Slump To Weigh On Dubai's RE Boom
By Stefania Bianchi and Andrew Critchlow
Of ZAWYA DOW JONES

DUBAI (Zawya Dow Jones)--The cooling U.K. housing market and weakening pound
could hit Dubai's real estate boom as British buyers, one of the emirate's
largest groups of foreign investors, tighten their belts, analysts say.
"I estimate a 10% drop in U.K. buyers," Stefan Schurmann, a real estate
analyst at EFG Hermes in Dubai, United Arab Emirates, told Zawya Dow Jones.
Jason Goff, head of treasury sales at Emirates Bank said favorable exchange
rates for British investors buying property in the U.A.E. are already a "distant
memory."
Goff expects sterling to fall below $1.90 this year making it more expensive
for U.K. investors to buy property in dirhams, a currency that's pegged to the
U.S. dollar. Sterling has fallen about 2.5% against the dirham over the last
year.
Dubai-based investment bank EFG Hermes estimates that British buyers now
account for 12% of international property investors in the emirate, behind Saudi
Arabians, with AED5.3 billion worth of investments and Indian investors with
AED5.2 billion.
There are more than 100,000 U.K. expatriates, close to the current population
of the U.K. city Exeter, living and working in the emirates, according to the
British Embassy.
The Dubai Land Department estimates that British investors own property worth
a total of 4.7 billion U.A.E. dirhams ($1.3 billion) in Dubai.
Real estate companies have invested heavily in advertising Dubai property in
the U.K. Companies like Damac Properties, the largest privately-owned U.A.E.
developer, have even resorted to offering free luxury cars to prospective British
buyers.
Falling house prices in the U.K., which could dip 10% this year, and the
higher cost of buying property in Dubai and Abu Dhabi could also dampen sentiment
amongst prospective British buyers.
The cost of a home declined 0.9% to GBP189,027 ($97,941) in April, from a
year earlier, HBOS Plc, the U.K.'s biggest mortgage lender, said this month.
In contrast, surging land prices in Dubai, up 184% over the last four years
and rising demand, continue to drive up home prices in Dubai.
According to a survey by Dubai-based property agents Betterhomes the average
cost of a home in Mirdif, a white collar Dubai suburb, is AED6.7 million, while
an apartment in Jumeirah Beach Residence will cost AED3.4 million on average.
"The current comparative fundamentals of the two real estate markets couldn't
be more different," said Jawad Mian, a real estate fund manager from Dubai-based
Rasmala Investments.
But Dubai-based real estate agents argue that a downturn in the U.K.'s
housing market and the weakening pound will make the sheikdom's property market
more attractive to hard pressed British investors.
"The falling pound and property prices may mean that U.K. investors will
invest in the Gulf region because of opportunities here and limited opportunities
at home," said Blair Hagkull, managing director of JonesLang LaSalle's Middle
East unit.
Dubai's economy is benefitting from a boom in Persian Gulf economies as oil
prices surge to new records above $135 a barrel, flooding the region that pumps
about a fifth of the world's crude with capital.
The emirate expects AED184 billion in real estate investment by 2010.

By Stefania Bianchi and Andrew Critchlow, Dow Jones Newswires; +971 4
3644967; [email protected]
Copyright (c) 2008 Dow Jones & Company, Inc.

(END) Dow Jones Newswires

Last edited by The Dean; May 25th 2008 at 12:26 pm. Reason: spacing
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Old May 25th 2008, 12:27 pm
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

It's nonsense...

10% of investors are Brits, most of the British investors have cash to burn.

They'll lose next to nothing in terms of sales as almost all properties are cash sales...
 
Old May 25th 2008, 1:29 pm
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

Originally Posted by W10 View Post
It's nonsense...

10% of investors are Brits, most of the British investors have cash to burn.

They'll lose next to nothing in terms of sales as almost all properties are cash sales...
"Cash to burn"? In the wake of the biggest mortgage crisis in living memory? Most buyers I'm aware of are mortgaged up to their necks......

..... and if the place they have in the UK is worh about 10 pct less than it was six months ago (not unheard of), they'll be very reluctant to commit to an overseas purchase......

Those already here? Not so much of a problem.

Potential new buyers? Don't think it's quite so easy for THEM.......
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Old May 25th 2008, 7:42 pm
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

It could however mean that UK buyers look to buy in the UAE rather that in the falling UK market. I know where I would look to invest my spare cash if I had any.
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Old May 25th 2008, 8:28 pm
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

Originally Posted by The Dean View Post
"Cash to burn"? In the wake of the biggest mortgage crisis in living memory? Most buyers I'm aware of are mortgaged up to their necks......

..... and if the place they have in the UK is worh about 10 pct less than it was six months ago (not unheard of), they'll be very reluctant to commit to an overseas purchase......

Those already here? Not so much of a problem.

Potential new buyers? Don't think it's quite so easy for THEM.......
12% of investors are Brits. Of that - i'd be willing to stake large sums of money that a large proportion are professional investors who don't need mortgages, or certainly aren't mortgaged up to the eyes. Even if you do the maths being put forward in the article. A 10% drop in a market which represented just 12% means a fall of 1.2%.

The one's who need the cash will sell up here, the ones that don't will continue to see it as a good investment. I don't think that Dubai is really going to feel the pinch. The UK will continue to feel it.

What that article does show us, is that it is completely a domestic market. Dominated by local speculators and investors. The top three international investors don't even come close to adding up to 50% of the market...and with oil prices going skywards, they can afford to artificially prop up the market for years to come.

And...This is the biggest mortgage crisis in living memory? You don't remember the 80s??

Last edited by W10; May 25th 2008 at 8:35 pm.
 
Old May 26th 2008, 7:33 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

If I was looking to invest in a buy to let property and had a choice between the UK and Dubai I know where my money would be heading.

If I just wanted to buy a holiday home in a country with a bit of sun then Dubai is too far away. I don't think the UK investors in Dubai will be too worried about a housing slump in the UK. Remember a lot of the "British" buying in Dubai will have UK passports but in no way is the UK their main home.
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Old May 26th 2008, 7:56 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

For me, Dubai is a place to earn money. Invest elsewhere.

The weakening pound against the Dollar/Dirham will increase the value you can send back to the UK. If you have had property in the UK for a number of years, and have no need to sell in the foreseeable future, then a 10% dip (or more) in property prices is hardly catastrophic.
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Old May 26th 2008, 8:04 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

Originally Posted by Border Reiver View Post
If I was looking to invest in a buy to let property and had a choice between the UK and Dubai I know where my money would be heading.
Me too, UK without a shadow of a doubt...incidentally, you would think that Dow Jones would know basic mathematics. GBP 189,027 is certainly NOT equivalent to US$ 97,941 in my book
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Old May 26th 2008, 8:55 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

Originally Posted by W10 View Post
12% of investors are Brits. Of that - i'd be willing to stake large sums of money that a large proportion are professional investors who don't need mortgages, or certainly aren't mortgaged up to the eyes. Even if you do the maths being put forward in the article. A 10% drop in a market which represented just 12% means a fall of 1.2%.

The one's who need the cash will sell up here, the ones that don't will continue to see it as a good investment. I don't think that Dubai is really going to feel the pinch. The UK will continue to feel it.

What that article does show us, is that it is completely a domestic market. Dominated by local speculators and investors. The top three international investors don't even come close to adding up to 50% of the market...and with oil prices going skywards, they can afford to artificially prop up the market for years to come.

And...This is the biggest mortgage crisis in living memory? You don't remember the 80s??
Do I remember the 80s? Yes of course, although I seem to recall the early-90s were far far worse………..

You are getting confused between a 'house price crash' (happens from time to time, but eventually prices recover) and a 'mortgage crisis' (which we have now, but have never had before).

The so-called sub-prime mortgage crisis in the US (where banks had to write off billions that they had overlent to, basically, families on low incomes) has spread through inter-bank contagion to the UK and continental Europe. The bottom line? Banks have very little money to lend, and what they have they are charging much higher rates for.

An example - someone not a million miles from my family applied for a mortgage last July, as he had seen a place he wanted. The best offer from the lenders he approached amounted to GBP 180k, at a modest premium over 'base'. In the event, he missed out to a rival buyer, and started searching again. He has now (about nine months later) found somewhere else, and has approached the same lender.

His income is the same (although his age has increased by one!), but they have offered him only GBP 140k, and at a considerably higher rate, despite the fact that the BoE has been cutting rates since early-December last year.

You may say that Dubai buyers are mostly cash-only, but that isn't the whole picture. In a normal chain, A buys from B, B buys from C, C buys from D, etc etc….. (bear with me – sorry!). Somewhere in that chain is a would-be buyer who cannot get the funding to pay the asking price……. So prices drop, not because they are 'overdone' but simply because buyers cannot reach those levels with limited funds available. Somewhere in all those chains, there are would-be Dubai property investors – but now they might not be.

Banks are using the higher margins for new buyers to subsidise their losses on last year's fiasco – and many buyers won't play that game.

I predict we have seen only the tip of the iceberg, and what follows will make the 80s and 90s seem like a stroll in the park.

It is possible that Dubai will be immune from the fall-out (which is global, not merely UK-related) but it would not do to count on it.

Like everyone else, I'm jealous of those who bought in Dubai five years ago, but my cash is staying firmly in the bank at present. Property everywhere will be cheaper down the road than it is now – in Dubai, just like everywhere else.

I sold my UK house twelve months ago, and have been paying rent to a money-grabbing landlord ever since. It's the best move I have made for a long long time.

Next year, I might even buy my old house back…….. HID still misses it.
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Old May 26th 2008, 9:03 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

[QUOTE=The Dean;6394481]
I predict we have seen only the tip of the iceberg, and what follows will make the 80s and 90s seem like a stroll in the park.

It is possible that Dubai will be immune from the fall-out (which is global, not merely UK-related) but it would not do to count on it.

Like everyone else, I'm jealous of those who bought in Dubai five years ago, but my cash is staying firmly in the bank at present. Property everywhere will be cheaper down the road than it is now – in Dubai, just like everywhere else.

IQUOTE]

my thoughts exactly
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Old May 27th 2008, 4:24 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

funny as these very expectations will keep the price buoyant a little bit longer than it should rationally be. But they will eventually come down, yes.
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Old May 27th 2008, 9:41 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

[QUOTE=shiva;6394518][QUOTE=The Dean;6394481]
I predict we have seen only the tip of the iceberg, and what follows will make the 80s and 90s seem like a stroll in the park.

It is possible that Dubai will be immune from the fall-out (which is global, not merely UK-related) but it would not do to count on it.

Like everyone else, I'm jealous of those who bought in Dubai five years ago, but my cash is staying firmly in the bank at present. Property everywhere will be cheaper down the road than it is now – in Dubai, just like everywhere else.


my thoughts exactly
Isn't abu dhabi the exception to this ? i hear the market is going thrugh the roof over there ?
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Old May 27th 2008, 9:49 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

[QUOTE=zabone;6399023][QUOTE=shiva;6394518]
Originally Posted by The Dean View Post
I predict we have seen only the tip of the iceberg, and what follows will make the 80s and 90s seem like a stroll in the park.

It is possible that Dubai will be immune from the fall-out (which is global, not merely UK-related) but it would not do to count on it.

Like everyone else, I'm jealous of those who bought in Dubai five years ago, but my cash is staying firmly in the bank at present. Property everywhere will be cheaper down the road than it is now – in Dubai, just like everywhere else.



Isn't abu dhabi the exception to this ? i hear the market is going thrugh the roof over there ?
yes but Abu Dhabi is in Abu Dhabi and Dubai is in Dubai. The article reffered to Dubai and not Abu Dhabi.

Abu Dhabi has a different set of curcamstances and different buyers. IE mass shortage of housing and locals who have more money than most countries. they can and will prop the market up indefinately
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Old May 27th 2008, 9:55 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

ok cheers - so do you think investing in abu dhabi would be more of a solid investment than keeping the money in the bank ?
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Old May 27th 2008, 10:02 am
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Default Re: "UK Property Slump To Weigh On Dubai's Real Estate Boom" - newswires

Originally Posted by zabone View Post
ok cheers - so do you think investing in abu dhabi would be more of a solid investment than keeping the money in the bank ?
no personally i think the whole market out here is a house of cards waiting to collapse. ALL markets a cyclycal and adjust after a period of time to a reasonable level. The market here is spurred on by people who have the absolute belief that the market will never drop...an ussustainable situation and far from reallity. Figure in a global credit crisis and its a matter of when not if.

That said if you are a cash buyer who can take the risk/hit then a quick flip may make money
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